Appraisals of Commercial Properties

Our most important goal at New West Consulting is to provide clients with appraisals that communicates the results of credible real property appraisals in a manner that is not misleading to the client or other intended users. The appraisers of NWC believe that achievement of our company objective is best realized by focusing on two key words that appear in our goal statement -“communicate” and “credible.” 

Attention to these two words enables us to consistently produce the high-quality appraisals expected by our clients.

The Encarta Thesaurus presents the following words as synonyms for the word “credible” believable, convincing, likely, probable, realistic, trustworthy, reliable, and sincere. These words are most commonly used to describe the character and quality of individuals, their work or statements, i.e., their reputation. Our clients can be assured that each appraisal assignment is treated by us as another step in our quest for excellence.

We, at NWC, frequently receive inquiries about the various types of reports that we offer. However, instead of offering a quick response, it is first necessary for us to develop a preliminary Scope of Work and identify the intended use(s) and user(s) of the appraisal. The current edition of the Uniform Standards of Professional Appraisal Practice (USPAP) allows for two forms for the written reporting of a real property appraisal; Appraisal Report and a Restricted Appraisal Report.

 The key difference between these two types of reports lies in the level of detail provided; an Appraisal Report offers a comprehensive analysis with full information; while a Restricted Appraisal Report only “states” the facts and findings of an appraisal, typically used when the client is the only intended user. 

 However, the current edition of USPAP now allows for other intended users, in addition to the client; these additional intended users must now identified by name, rather than by just type.

The Appraisal Report is intended to be flexible with the Scope of Work, as decided by the client and the appraiser, establishing a written set of expectations that form an agreement or understanding as to the specific requirements of appraisal; thus, helping to ensure the property is appraised in compliance with USPAP and addresses the specific requirements and expectations of client. Key, to developing the Scope of Appraisal is identifying and understanding both the intended use and user(s) of the appraisal.

Restricted Appraisals must include the following use restriction statements: clearly and conspicuously “state a restriction that limits use of the report to the client and the named intended user(s); and  also “warn that the report may not contain supporting rationale for all of the opinions and conclusions set forth in the report.”

New West Consulting has developed a custom appraisal-writing environment that includes using task management software. This system results in high-quality appraisals with on-time deliveries. Our appraisal process also includes a comprehensive quality control function performed by our in-house staff of Certified General review appraisers and MAI designated reviewers who review each of our appraisals; tracking and documenting any necessary revisions made to the appraisal prior to client delivery.

Commercial Property Types Covered

New West Consulting completes appraisals on most commercial property types. However,  we do concentrate our appraisal work on “neighborhood commercial” and mid-tier type properties. Additionally, we have extensive expertise in several specialty-property types, such as gas stations / convenience stores, carwashes, self-storage, RV Parks, and charter-private schools / religious facilities. Please click on one or more of the below accordion tabs for more information on specific property types. 

New West Consulting’s coverage of the office market is strategically restricted to those office projects with three or fewer stories and/or smaller than 70,000 SF in size. More specifically, our firm’s market niche for office properties emphases the valuation of suburban and rural sited buildings.

This selective coverage of the office sector allows us to better allocate our firm’s resources and provide our clients with superior valuation services. It also simplifies the task of maintaining our in-house knowledge-base of market cycle-related influences across Arizona’s different geographies; from metropolitan market areas to the smaller cities and rural communities. Additionally, we track the economic structures, as well as local demand-supply dynamics for each market zone.

While cyclical changes in the office market may result in challenges for some, they also create excellent purchase or real estate investment opportunities for others. We offer individual and small-group investors an independent “second-opinion” when considering the purchase or sale of an office property.

Office property sub-types that we cover include:

  • Build-to-suit
  • Condominium
  • Industrial / commerce
  • office
  • Low-rise
  • Medical
  • Multi-tenant
  • Single-tenant

New West Consulting’s industrial property experience runs the gamut from the smaller commerce-type properties preferred by business start-ups to the valuation of large-scale manufacturing and distribution facilities. Our expertise also extends to the appraisals of rural-sited manufacturing plants, including detailed analyses of their potential for conversion to alternative uses.

The core of our industrial-related appraisal assignments is, for the most part, comprised of local-level to mid-tier properties; including a number of rural-sited projects.

More specifically, these are commerce-industrial properties whose values are driven primarily by the market forces of their competitive market areas rather than by regional or national influences. Owners of these types of properties are typically individuals and small investment groups.

  • Build-to-Suit
  • Cold storage / Food processing / Contractor Yards
  • Early-to-Mid Twentieth Century Industrial Properties
  • Industrial Condominiums
  • Manufacturing
  • Net Leased / 1031 Exchange
  • Office Service / Warehouse
  • Warehouse / High Cube / Big Box

Employing market segmentation when seeking appraisal assignments allow NWC appraises to better track and understand the nuances of buyer/user preferences across the property “tiers” that we do cover.

New West Consulting’s coverage of retail-commercial properties places emphasis on neighborhood-level or rural-sited projects; these are properties whose values are driven by the market forces of their immediate surrounding area rather than by regional or national influences. These types of properties are commonly purchased by smaller investors for either owner occupancy or lease to local businesses and franchisees of national chains.

This level of real estate provides unique challenges for valuation assignments located in the non-metropolitan areas of Arizona since the influences on value can vary significantly between communities across the state. Knowing the community is critical to the analysis.

We believe that even small retailers can no longer rely simply on a “follow the leader” or a “me too” approach for their store-selection process. Instead of trusting the locational decisions made by the larger “players” in the marketplace; the ever increasing competitiveness of the retail environment now requires companies to develop and implement their own site selection strategies.

Retail-commercial property sub-types that we cover include the following:

  • Strip retail centers
  • Grocery-anchored centers
  • Neighborhood centers
  • Freestanding buildings
  • Highway commercial
  • Downtown buildings (rural communities)
  • Tourist shops and galleries
  • Country markets

Our coverage of multi-family properties ranges from “small-income” projects (5-to-24 units) to larger complexes with more than 200 rental units. Properties vary in their lifecycle from proposed construction to older, non-competitive complexes that require renovation and a repositioning in the market.

We also understand the many micro-markets present within the larger metropolitan area that influence the supply and demand for rental housing. These micro-markets reflect factors such as the availability of public transportation, convenience to employment, proximity to sports and entertainment districts, and distance to post-secondary educational facilities.

New West Consulting has a strong commitment to Equal Housing Opportunity. All of our appraisals are prepared in accordance with Federal Fair Housing Laws and Regulations.

NWC does not perform valuations of apartment complexes that participate in, or are developed using, the Low Income Housing Tax Credit Program because of the Federal tax ramifications for participants in this program.

Many of Arizona’s rural communities rely heavily on tourism and related recreational activities to support their local economies. Cities and towns in southwestern Arizona attract large numbers of seasonal visitors from northern climates who spend the winter months in the desert areas of the state.

Communities in the state’s higher elevations offer cool temperatures for summer get-a-ways; with forests, lakes, and scenic mountain vistas for recreation. Winter activities, such as skiing and snowmobiling provide a “second” tourist season for mountain towns.

Our firm’s emphasis on providing statewide coverage for commercial properties includes expertise in the valuation of a variety of tourism and recreational related property types. Specific property types include:

  • RV Parks and Campgrounds
  • Tourist Cabins
  • Bed and Breakfast Inns
  • Rural General Stores
  • Travel Centers
  • Marinas (Leasehold Interests)
  • Boat Storage Facilities
  • RV and Boat Sales Centers

Places of Worship comprise another specialty property group that is covered by the appraisers of New West Consulting.

It is a commonly held perception that buildings used for religious purposes rarely sell or change ownership. While this assumption may hold true for older, established cities with static populations; it is not applicable for the rapid growth communities of Arizona.

In our State’s long-term growth environment, it is quite common for religious congregations to outgrow the expansion capabilities of their existing facilities. Concurrently, sustained population growth has also enabled numerous start-up congregations.

Moreover, new immigrants from abroad have introduced their respective religious faiths into the communities of Arizona. Thereby creating more demand for places of worship.

The appraisers of NWC are also sensitive to the specific building requirements of various faith groups. We routinely complete appraisal assignments for religious-use properties when congregations seek to construct new facilities, expand existing buildings, or obtain funding for making capital improvements. Call us.

The valuation of vacant land, improved pad-sites, or existing properties improved with obsolete structures can often result in challenging appraisal assignments. This is because answers to four basic questions must be developed as part of the valuation process for land.

  • What can be built?
  • What should be built?
  • Why should it be built?
  • When should it be built?

Many developers, architects and land planners tend to focus on the “can” and “should,” especially during boom times. However, astute developers, lenders, and investors know that seeking answers to the “why” and “when” is actually more important to the decision-making process.

In the valuation of vacant land, we place emphasis on the “when” in the form of identifying and reporting market expectations regarding the “development-time horizon” for a particular property or class of properties. Shifts in the development-time horizon (anticipated time remaining until development occurs) typically has the greatest impact on price volatility for vacant land over the short-term.

Moreover, in most instances, a rapidly shifting development-time horizon provides a strong indication of a highly speculative and potentially volatile land market. A good indication of an “over-bought” or “bubble” market is where investor optimism regarding a shortening of the development-time horizon is not supported by base demographic and economic trends.

Let New West Consulting’s years of real estate experience assist you. Our knowledge of past business and real estate cycles is a key asset in the valuation of vacant land.

Land-related property sub-types that we cover:

• Acreage
• Raw (unimproved) land
• Improved (off-sites) parcels
• In-fill urban parcels
• Pad-sites

• Commercial-industrial lots
• multi-family apartment sites
• Custom lots
• Rural highway frontage
• Ground lease analysis

New West Consulting possesses the specialized experience and competency necessary to complete appraisal assignments for Charter and Private school facilities. The scope of our experience for this property group extends from small Montessori pre-schools all the way to ranch-style boarding schools.

Arizona has been a leader in the charter school “movement” since enabling legislation was enacted in 1994. Presently, there are approximately 500 charter schools operating within the State, with almost 113,000 enrolled students. Charters now comprise 10% of the total number of public schools in Arizona. .

However, when charters are viewed, not as schools but as a distinct real-property type; “500” quickly becomes a small number. Thus, few appraisers possess the experience necessary to competently value charter schools.

Appraisal problems usually can be eliminated upfront by carefully matching the appraiser with the property type when ordering an appraisal for special-use real property.

Retail petroleum facilities, including convenience stores, travel centers, and carwashes are customarily marketed and sold as operating businesses or “going concerns.” Thus, the real estate component comprises only part of a combined package that also contains personal property items (FF & E) and the intangible assets of a continuing business enterprise; including goodwill (or a proven track record of successful operations).

Although all of these component parts do contribute to value, the prices paid for these types of properties are almost always a direct function of the profitability associated with the aggregate going concern.

Nevertheless, Federal banking and appraisal regulations stipulate that appraisers must segregate, analyze and report the respective value contributions associated with the (1) real property, (2) personal property, and (3) intangible business components of the aggregate going concern value. The goal of these requirements is to improve the reliability of lender risk assessments in loan underwriting decisions.

However, development of credible and market-supported analyses for each of these segregated “value components” requires an experienced appraiser who possesses the highly specialized knowledge necessary to competently perform valuations for these property types.

Yes, there are appraisal companies that do specialize in the valuation of retail petroleum facilities on a regional or even national basis. Fly-in, inspect the property, and fly-out; these traveling appraisers may understand gas stations, but are they really able to keep current on the thousands of unique market areas across the country? Appraiser competency not only relates to knowledge and experience for particular property types, but also to specific geographical market areas.

New West Consulting knows Arizona. We also possess the specialized skills and depth of experience necessary to value going concerns, including convenience stores, gas stations, travel centers and carwashes. Call us.

Reflecting our firm’s focus on neighborhood-level and rural-sited projects, we have extensive experience in the self-storage and vehicle/boat storage product type. Our appraisals range from urban-sited, multi-story self-storage facilities to boat storage yards situated along the Colorado River.

Our firm also maintains a propriety library of “spatial profiles” obtained from the many self-storage properties that we have appraised. We are able to aggregate and analyze this information, along with the operating performance of each facility, to better understand the interrelationships between (project) operating success and such factors as the level of competition, demographic “lifestyles” of likely users, population density, housing development trends, apartment complexes, local business activity (SIC/NAICS codes) and transportation linkages.

Trust New West Consulting for Complete Commercial Real Estate Valuation Services in Arizona

New West Consulting provides reliable and accurate valuations across the state of Arizona, including its smaller communities and rural areas. Our team of appraisers, together, possess the property experience and especially the geographical competencies necessary to cover our large service area. Give us a call for your next appraisal.